The quake hit at 2:44pm (12:44pm Phuket time) about 50 kilometres (30 miles) north of the city of Taitung at a depth of 10 kilometres, the USGS said.
Its initial strength was given as 7.2-magnitude but USGS later downgraded it to a 6.9-magnitude quake.
At least one building collapsed in the town of Yuli according to Taiwan’s semi-official Central News Agency.
Video posted by CNA showed panicked residents running towards the building which had caved in on itself and sent up a thick cloud of dust.
Shaking was also felt in the capital Taipei, an AFP reporter said.
A 6.6 magnitude quake hit the same region yesterday and there have been multiple tremors since with minimal damage in what is a mountainous, sparsely populated rural region.
But today’s quake was much stronger.
Japan’s Meteorological Agency (JMA) issued a tsunami advisory to remote islands near Taiwan.
Waves as high as one metre were expected to arrive around 4pm, it added.
Live TV footage from the affected islands did not immediately show clear signs of high waves.
The China Earthquake Network Centre said tremors were clearly felt in coastal areas including Fujian, Guangdong, Jiangsu and Shanghai.
Taiwan is regularly hit by earthquakes as the island lies near the junction of two tectonic plates.
The island sits on the Pacific “Ring of Fire”, an arc of intense seismic activity that stretches through Southeast Asia and across the Pacific basin.
Taiwan’s deadliest ever quake was a 7.6-magnitude jolt in September 1999 that killed over 2,400 people.
Meanwhile, thousands of people were in shelters in southwestern Japan today as powerful Typhoon Nanmadol churned towards the region, prompting authorities to urge nearly three million residents to evacuate.
The JMA has issued a rare “special warning” for the Kagoshima region in southern Kyushu prefecture - an alert that is issued only when it forecasts conditions seen once in several decades.
By this morning, 25,680 households in Kagoshima and neighbouring Miyazaki were already without power, while regional train services, flights and ferry runs were cancelled until the passage of the storm, local utilities and transport services said.
The JMA has warned the region could face “unprecedented” danger from high winds, storm surges and torrential rain.
“Maximum caution is required,” Ryuta Kurora, head of the JMA’s forecast unit said yesterday.
“It’s a very dangerous typhoon. The wind will be so fierce that some houses might collapse,” Kurora told reporters, also warning of flooding and landslides.
So far, 2.9mn residents in Kyushu have been issued with evacuation warnings, according to the government’s Fire and Disaster Management Agency, and Kagoshima officials said over 8,500 people were already in local shelters by this morning.